Flip and Danny walk through calculating net worth: add up your assets (checking, savings, retirement, investments, real estate, cars) and subtract liabilities (mortgages, loans, credit cards, student debt). They cite Federal Reserve data showing median net worth and why knowing your number matters early.
Hey, everybody. Flip and Danny here, founders of the Freedom real estate group family of companies. And welcome to another episode of our.
Podcast, which is called freedom through passive income.
That's right. And today's episode is called how to calculate your net worth.
That sounds like fun.
So real quickly, the calculation is just very simple. It's your assets minus your liabilities.
That's right, Done.
Thank you so much. We like to keep these short and sweet.
No, how about we describe a little bit of.
I'll let you.
Okay, so assets are things like your checking account, your savings account, your retirement account, investment accounts. It also includes your real estate, your cars, any other assets that you have. Then you're going to subtract any liabilities. Liabilities are going to be things like your mortgages, your personal loans, your car loans, your credit card debt, student loan debt, and any other debt that you owe that's going to equal your net worth.
So simply said, your net worth is your haves, what you haves, minus what you owes.
That's good. That was kind of cute. So the Federal Reserve Board, they issue a survey of consumer finances every three years. The most recent report came out in September of 2020 and that was data collected from 2019. So we're going to actually talk to you about this data. We've got the reports right here and.
I'll put it on the scene. They can see it.
Okay, perfect. Yeah. So it's the average net worth by age and it talks about the median net worth as well as the average net worth. The difference between that is median is. Let's just say you have 10 numbers. The median is going to be smack dab in the middle. So 4 and 5 are going to be your median numbers, but an average is adding up all 10 and then divid dividing it by 10, and then you're going to get your average. That's a difference in the numbers here. And you're going to see how that works out as Flip goes through it.
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Yeah, so you can see when the head of the Family is less than 35. The median is only 13,9. That's crazy. But the average is 76. So that means the top numbers get real big, real fast.
Exactly. And that's why knowing the median is so important, because otherwise you think I'm so behind. But the top, you know, 1%, they've got so much that it brings the average higher for everybody.
And I don't see the, the box for my age on here.
You're on there.
Yeah, I'm in the median.
Like how I did that. There you go. But you can see that the median is being in the middle of those numbers. That it's, you know, it's, it's just. It's a good curve.
Yes.
It's not a straight line.
No, no, not at all.
Yeah, but that's, that's some impressive numbers. What actually jumped out to me the first time I looked at this, I went down to the 75 plus, and I'm like, oh, that's almost a million. But look at the 65 to 74. It's 1.2. So they're doing some serious spending between 65 and 75.
Yes.
I have a feeling I'm going to be doing the spending.
You are a professional. That's.
That's true. But. But again, I'll have this on the screen. Everyone can see this. But that's, that's what, what jumps out to you. What, what do you want to talk about on this?
Well, I just think it shows how important it is to be focused on building your net worth and starting earlier. If people had more financial or had more financial education at an earlier age, then these numbers would be greater across the board. And I don't think there would be that delta or difference between median and average being so big. And I think that's what we're trying to do here is trying to provide financial education to people. No matter how old you are, whether you're 18 or whether you're 60, it doesn't matter. It's. What matters is you take the first step towards building it, because the more you build, then the closer you get to the average, which brings the median up. And, and hopefully, you know, we can continue to spread the word and really help people do that, because we always go back to the Social Security Administration stats and how there's such a high percentage of people who end up getting to their retirement years and they have to keep working. It's not that they want to keep working or they're living with family or something like that. And it's Very, very few. I think it turned out to be like 8% or something of people who actually can, you know, live their retirement the way that they want to live the retirement and the way they've always hoped to live it. So start today. We can never say that again. Stated enough through our episode saying tomorrow is never promised. Every day is a gift. Start right now. Every little step takes. I think we're like a broken record.
We're pretty much beating that dead horse.
Absolutely.
And we're going to continue to do so for 365 days. We've already done quite a few. I don't even know what number episode we're on yet, but hopefully everybody's listening and they're getting closer to their goals and ability to retire.
Yeah, just shift these numbers. The median and average shifted up so that the 35 to 44 is already at the 1.2 million. So just try to try to shift those numbers up.
Yeah. Changes the game.
Yep, sure does. Well, again, we like to try to keep these episodes as short and sweet as possible. So we hope that you enjoyed this episode. Make sure, if you're watching on YouTube, make sure you hit the subscribe button. Make sure you join our groups, facebook.com forward/groups forward slash.
Freedom through passive income.
That's right. We're also on LinkedIn. Just go to the search bar, type.
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All.
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